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## SOLUTION TO EXERCISE 11-12

TIP: Notice how the columns on this statement foot and crossfoot.

Explanation: A corporation is to disclose all changes that took place in all stockholder equity items during the reporting period. A convenient and effective way of meeting that requirement is to present a stockholders' equity statement (sometimes called a statement of stockholders' equity). When this statement is presented, it replaces the retained earnings statement because it contains all the information that a retained earnings statement would contain plus data regarding changes in other components of stockholders' equity.

The computations for the stock dividend are as follows:

1. 346,000 shares outstanding × 5% = 17,300 dividend shares.
2. 17.300 shares × \$3 = \$51,900 decrease in Retained Earnings.
3. 17.300 shares × \$1 stated value = \$17,300 increase in Common Stock.
4. 17.300 shares × (\$3 - \$1) = \$34,600 increase in additional paid-in capital.

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